The troy ounce, by which we measure precious metals, has its roots in ancient Rome, but was later made the global standard of measurement by the British Empire. Today, however, it is the U.S. who are purported to have the most valuable gold reserve in the world: an estimated 8,133.46 tonnes. This gold reserve is worth approximately $11 billion, over half of which is stored in the U.S. Bullion Depository in Fort Knox, Kentucky.
In 2024, the price of gold broke records rising from $2,000 to $2,600. With some speculating it will continue to reach record highs, and others, such as Elon Musk, theorising that the U.S. gold reserve is secretly diminished, 2025 is shaping up to be a significant year for investors. The question must be asked, how strong will gold be in 2025?
Is Gold Still a Safe Haven Asset?
Speaking with Disruption Banking, Jason Cozens, CEO of gold trading platform Glint, commented:
“Gold is expected to push through and beyond $3,000 an ounce, driven by geopolitical uncertainty, strong central bank demand, resilient inflation, and the U.S. government’s worsening fiscal deficit. But the key isn’t just the price – it’s that gold remains the only store of value that can’t go to zero. In a world where every fiat note loses value by design, gold stands as the most reliable safeguard for your hard-earned wealth. Its real strength lies in its timeless capacity to protect purchasing power when everything else risks collapse.”
Cozens has repeatedly signalled to investors the strength of gold for over a decade. In that time, the covid pandemic, inflation and heightened political discord have all brought investors towards the safe-haven asset of gold. But on February 18, after a seven-week surge, gold passed record values of $2,900 an ounce, a figure which investment bankers expect to rise above $3,000 in the near future.
This week, some corporations are warning investors in their regulatory filings of the potential losses they may suffer as a result of Trump’s new tariffs. Gold is traditionally an asset used to hedge against inflation. In the aftermath of tariffs on aluminium and steel especially, many investors are once again rushing towards it.
This aggressive tariff policy, its threat of inducing a trade conflict, will likely bring a further increase in inflation and some initial volatility in the stock market. This suggests that gold for the foreseeable future will remain a safe haven asset.
But while gold ETFs are performing, demand for gold products, such as jewellery, is lowering due to a combination of rising prices, inflation, and slower economic growth. Likewise, China has seen a year-on-year fall in demand for jewellery. While gold is pulling investors from a turbulent market, regular consumers are increasingly being priced out of its physical products.
What Does Elon Musk Want with Gold?
Elon Musk, and some political pundits, have argued that Fort Knox should be audited for the first time since 1974. At the same time, many including Musk are asking whether a lack of auditing is covering up a secret diminishment within the U.S. gold reserve.
Fort Knox is notoriously secretive and highly secure. It is not a new theory that the U.S. is lying about its gold supply. But Musk, more than reigniting interest, ensured a commitment from Donald Trump to allow his DOGE department to enter and audit Fort Knox.
“If the gold isn’t there,” said Trump, “we’re going to be very upset.”
If the gold is not there, Trump will certainly be concerned. Although the dollar has not been tied to the value of gold since 1971, confidence in the U.S. government and the value of the dollar would dramatically decline, as it nonetheless represents a promise backed by the U.S. government. If the government’s reputation is slighted, and its secure and tangible assets are any less than it claims, confidence in the value of the dollar and the government itself will fall in tandem.
Investors in this instance may rush towards gold, alongside cryptocurrencies such as Bitcoin, to protect themselves from ensuing instability.
Revaluing U.S. Gold Reserves
While this Fort Knox conversation is occurring, investors are speculating that the US might revalue its gold piles. If successful, the US would gain massively by raising its $42 evaluation, unchanged since the 1971 Bretton Woods agreement, to the market value of almost $3,000, generating a huge cash windfall with its reserve value rising from $11 billion to over $700 billion. But this would likely require approval by the US congress, and is so far not something the Trump administration is considering seriously.
This cash influx would provide huge debt relief in the short-term. In the long run, it would have widespread consequences. For one, the precious metals market would see massive growth, with some estimates expecting an increase of up to fifty per-cent in value. But increased liquidity would fundamentally change US monetary policy. Markets across the globe would have to adapt to a sudden rise in the value of precious metals, to which currencies are still closely tied.
Ultimately, the speculation surrounding Trump and Fort Knox is only going to push more investors towards gold, as stock markets rise but grow less stable.
How Strong Will Gold Be in 2025?
Cozens tells investors: “Gold is security, Glint its key.” The US stock market is twice the size of the US economy. Cozens points to Warren Buffet, who for this reason keeps an increasingly large stock of cash. The growth of the US stock market is unlikely to slow in the long-run, and Buffet amongst others considers its rapid rise will be volatile.
Demand for jewellery dropped in consumer demand in 2024, despite a market appetite for gold ETFs. But with Trump’s tariffs, speculation surrounding the value of the US gold reserve, and many signs pointing towards greater inflation, the price of physical gold will likely continue to rise.
At the beginning of 2025, the gold ounce’s ceiling is high. Goldman Sachs recently raised its year-end estimate from $3,000 dollars to $3,100. The bottom line is that gold has always been an asset that performs best during times of uncertainty, and 2025 is so far lining up to be an intensely uncertain year for investors.
Author: Sean Maguire
#Gold #Glint #FortKnox
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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